Times continue to be difficult for mortgage lenders and they seem unable to come to terms with how they want to lend, how to do so and who to.
Lack of confidence seems to be the biggest single denominator effecting mortgage rates and lending policy. This is reflected in the London Inter Bank Offered Rate (LIBOR), the rate charged between banks for financial transactions. This has risen to be more than double the Bank of England base rate and of course as we all know banks will charge a higher rate if they perceive a greater risk. This clearly demonstrates a lack of trust and confidence between the national and global banks. This directly results in a poor and costly financial wholesale market and higher rates passed on to the consumer, namely you and me.
For some time now we have noticed this manifesting itself in fixed rates creeping up, lenders tightening credit scores to restrict new business and of course the recent announcements from a number of lenders that they are increasing there Standard Variable Rates, which I am sure, with more to follow. As a result of poor past lending practices we have seen a movement away from what is regarded as more risky business. Namely, Self Certification of income is no longer available, sub prime mortgages have dramatically reduced and a there is trend away from Interest Only lending. Many of these changes will be more beneficial for the future stability of the mortgage market and hopefully will help to even out the boom and bust cycle.
But the million dollar question is “what should I be doing now” if I am on a tracker or standard variable rate with my mortgage. Do I stay as I am, because I have never had it so good or do I start to consider switching into a fixed rate to safeguard myself against any further or future rate rises. Perhaps if you are on a standard variable rate with your lender you should be thinking of that now, but if you are lucky enough to be on a tracker you could leave it a bit longer until the signs are that the Bank of England base rate is about to start going up. Either way it is a difficult judgement to make and only you can make it and if you leave it too long rates will already be higher than they are today. With a bit of guidance from ourselves or another independent mortgage broker you will certainly have a much clearer view.
In my opinion lack of confidence is the single biggest factor holding back the enconomy, availability of mortgage funds and of course lending policy. Once confidence starts to return everything else will start to improve including job prospects, order books and of course we will all have a greater sense of security and confidence in the future. But of course the Bank of England will start to increase the bank base rate and borrowing will start to become dearer for us all.
Whatever the view you hold on whats best to do with you your mortgage, it is not an easy time to make a confident and important decision. There is still an appetite with lenders to lend, even though they are more sensitive about who they lend to, how much they will lend and of course they are charging more. Even in todays more difficult market there are still lenders who will take a view on adverse credit (poor credit history) applications.
Do not listen to the scare mongers that you can’t get a mortgage unless you have a 25% deposit and that lenders are not lending. This is a complete nonsence, mortgage lenders do still have an appetite to lend, there are positive signs that the housing market will recover, many developers are reporting increased building and rising profits. First Time Buyers are returning to the market and lenders are accepting deposits as low as 5%. This is a great time to buy a property whilst property prices are held back and to re-mortgage before interest rates rise any more. Please take time to consider your mortgage situation, as the signs are already there. There is only one way mortgage rates are going to go and that is up.
MD Westexe Mortgage Solutions